Tag Archives: environmental footprint

Unilever & New Global Report: How Voluntary Sustainability Initiatives & Supply Chain Transparency Can Make a World of Difference

24 Nov

Two items caught my eye recently.  One is a new report called the State of Sustainability Initiatives (SSI) Review 2010.  This review was a collaborative effort by the International Institute for Sustainable Development (IISD), the International Institute for Environment and Development, Aidenvironment, the United Nations Conference on Trade and Development, and ENTWINED–Environment and Trade in a World of Interdependence.

The focus of the SSI Review 2010 is geared specifically to agricultural commodities, specifically the forestry, coffee, cocoa, tea and banana sectors.  What is interesting is that the review focuses on “voluntary sustainability initiatives” (VSI) and how they can impact overall market performance, governance, criteria coverage and implementation practices.  More interesting is how the report treats supply chain dynamics and decision-making.  In a nutshell (no pun intended!) the report reveals that major voluntary initiatives are altering the way supply chain decision-making is made by “providing civil society and developing country stakeholders with a more active role in setting trade rules and production practices”.  Further the report underscores how increased levels of stakeholder pressure and transparency in the marketplace are reshaping collaboration across and between supply chain networks.

Embracing the Triple Bottom Line

The SSI report indicated that companies are embracing triple bottom line aspects of their products in managing inputs and outputs along the value chain, focus within the three primary sustainability spheres:

  • Environmental criteria are strongest related to integrated pest management and use of restricted substances or prohibited chemicals, though less so on issues related to energy conservation and greenhouse gas management
  • Social criteria revolve less around gender, employment benefits, community involvement, and humane treatment of animals and more towards around International Labour Organization (ILO) conventions, (mainly coverage of health and safety and employment conditions).
  • Economic criteria are less likely to be addressed across the agricultural sectors although focus on product quality requirements and minimum wage requirements are gaining steam.

Focus on “Radical” Transparency

Growth across voluntary sustainability initiatives is also being driven by growing demands for transparency in global supply chains. There are generally three types of transparency evaluated in this report[1]:

  • Information Transparency: the act of making accurate, useable and substantial information available to stakeholders.
  • Participatory Transparency: the act of selecting the information to be made available based on user needs and input (i.e., “participation”).
  • Accountability Transparency: the act of presenting information that is neutral, objective and balanced, allowing stakeholders to reach their own conclusions regarding performance or evaluation.

The SSI Review reveals that “voluntary initiatives are playing an important role in improving supply chain transparency by bringing more credible systems for monitoring, enforcing and reporting on good practice.”  Specifically, key findings include:

  • 70 per cent of the initiatives reporting compliance with ISO 65[2] or application of an independent accreditation system;
  • almost all of the initiatives surveyed applying an annual audit process to ensure compliance with specified criteria, although there is considerable diversity in the degree of flexibility with which such processes are implemented; and
  • 70 per cent of the initiatives surveyed managing a separate Chain of Custody standard and a majority of initiatives applying some form of segregation of compliant products to allow for traceability.

This tendency toward additional transparency in the supply chain is lessening the potential for false product claims, although ‘greenwashing’ remains a constant threat to consumers looking for the “real deal” when purchasing environmentally responsible or eco-friendly food or consumer products.

The report further goes on to state that “transparency improves what we know about markets and the institutions that drive them. Improved access to information helps everyone in the market better understand the implications of their investments and dealings within the market. By enhancing information flow, transparency can promote market efficiency, social welfare and cost internalization, all core principles of sustainable development. Improved information also allows stakeholders to participate more knowledgably in the governance processes—thereby promoting participatory governance, also a core principle of sustainable development.”

Unilevers “Big, Bold” Example

Almost simultaneously to the release of this report comes a huge announcement last week of Unilevers plan to reduce its environmental footprint by 50% by the year 2020.    According to the article in GreenBiz.com by @marcgunther, the Sustainable Living Plan “breaks new ground for a number of reasons.

  • It is comprehensive, setting more than 50 social, economic and environmental targets.
  • It is rigorous; the company says it has measured the carbon, water and waste footprints of 1,600 products, representing 70 percent of its volume.
  • It’s far-reaching, taking into account the full life cycle impact of its product, from “seed to disposal,” as one executive put it.”

Unilevers plan is big, “hairy” and audacious- just what companies need to do stay ahead of the competition by implementing VSI’s that respond to consumer needs.  As part of the plan, Unilever plans to source 100% of its agricultural raw materials “sustainably” by 2020.  This will include aggressive supply chain outreach, monitoring and measurement (the metric will be raw or packaging material sourced from verifiable (certified and some self verified sustainable renewable sources or materials made from recycled materials (% by weight)).  Tea and palm oil are already in the queue with additional materials to be added as part of a sustainability focused program in place for the past 12 years. They also began to assess their environmental impact across the supply chain from sourcing raw materials to production, distribution, consumer use, and disposal.   Unilever has also implemented a Business Partner Code to ensure their suppliers meet their expectations on social and environmental impacts.

Supply Chain Value Recognition

The SSI Review and companies like Unilever are motivated by recognition that improved understanding of customer behavior, recognition of sustainable development challenges faced in a global marketplace and effective policy initiatives are vital to business success and societal vitality.  Doing so in a deliberately transparent and collaborative way stimulates innovation, better design and effective flow of goods and services across and through networks, continents and communities (from resource extraction to production, to distribution, to consumer and back again if possible).

Great lessons and cues on supply chain sustainability practices can be taken from the SSI report and Unilever regardless of what market sector you operate in.  You don’t have to be a coffee producer or banana company to gain an understanding as to how voluntary sustainability initiatives can improve your business and how driving these initiatives through your supply chain can gain great competitive advantage.


[1] J. M. Balkin, 1999, “How Mass Media Simulate Political Transparency,” Cultural Values, 3(4), 393-413.

[2]ISO 65 is the International Standards Organisation (ISO) guideline ‘General requirements for bodies operating product certification systems’. It is a general guide for product certification and has been referenced or used as a base for most organic norms and regulations (especially in Europe, Japan, Canada etc.)

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Choose the Right Flavor: Ice-Cream, Sustainability & Business Innovation

27 Jul

Do you like your ice cream soft served or hard scooped?   What is your favorite flavor?  Do you like it straight up or with sprinkles on top?

So I heard on a very hot day recently with the kids at the ice cream “shoppe”.  This made me dwell over how my clients view sustainability.  You see, while a great deal of change has occurred in business over the years, sustainability is to the uninitiated as flavorful as the worst ice creams ever invented (http://bit.ly/aIuKYD).  Ironic that most of those flavors originate in Japan, the home of Lean, Quality Management Systems, Six Sigma, The Toyota Way, and all things continual improvement. Oh, BTW, there really ARE plenty of tasty ice creams and gelatos that are sustainably made (locally sourced materials, organics, community based giving programs http://bit.ly/dfGiaC).

The “look” and “feel” of sustainability then, depends on the level of enlightenment that a company has, the desired “end state” and on the depth of its resources to execute the change (see Joel Makower’s recent post in Two Steps Forward http://bit.ly/aTbzVz ).  So it’s important to note that while the main focus these days is on the environmental part of sustainability (i.e. “green”), that’s not the whole story.  ‘Sustainability’ embraces the legal, financial, economic, industrial, social and behavioral aspects of organizations as well as the environment.

In a new open source book, The Sustainable Business, by Jonathan Scott (http://bit.ly/bGhyu6), he describes seven key elements and criteria needed for organizations to evolve and meet the truest definition of a sustainable organization (the 7-P application model).   Briefly, the 7-P’s of sustainability are:

  1. Preparation – setting the stage for change (both physically and psychologically) and understanding what the reformer is up against when trying to implement profitable, long-term business practices while accepting the breadth and depth of this subject (e.g.: the financial implications of sustainability and the fact that it is not about being independent).
  2. Preservation – encompasses two areas: internal (collecting and displaying real-time measurement) and external (keeping ahead of laws, pending legislation, trends, and developments).
  3. Processes – sustainable belief systems, philosophies, business models, and thought patterns that help match a business with customer demands, core capabilities, and best practices.
  4. People – accepting the importance of training and education and working diligently to avoid the wasting of people, specifically: employees (who seek security and motivation), stakeholders (who want a return on their investment), customers (who want safe, value-laden products), and the world community – including the two-thirds of humanity who are currently left out of the global economic loop (who desire jobs and inclusion) and who represent an economic force all their own.
  5. Place – the buildings and places where work is performed and/or products are sold.
  6. Product – ensuring that goods and services are free from unnecessary waste (‘non-product’) and toxins – and designed so that the materials, energy, and manpower that comprise them (and their packaging) are treated as investments and continuously reused.
  7. Production – the physical, mechanical, biological, and chemical processes used to transform raw materials into products or services – and transport them.

Building on his Scotts multi-dimensional perspective on sustainability program development, three principal objectives of a sustainable organization must, at a minimum:

  • Minimize Resource Consumption, and
  • Avoid Damage to the Environment, while
  • Meeting Business Goals, Human Needs and Stakeholder Aspirations

So how does one get to there?  One way is through a systematic framework like an ISO 14001-based Environmental Management System (EMS).  While ‘sustainability’ is a guiding principle to keep organizations on track as an EMS is executed, an EMS is the framework – a set of processes and tools for effective mission accomplishment.

Supposing as Scott and Makower suggest that an organization wants to go beyond the environmental leg of sustainability and include the social and financial aspects as well…all good!  However, without the resources to make the leap and a systematic process to keep on track, the outcomes could be disappointing.  So before you leap, plan ahead.  Build a system to plan, implement, measure and check progress of the initiative.  Look for the quick wins.  Build an innovation-based culture and reward positive outcomes.  Measure, manage, report and build on the early wins.  Build the initiative in manageable chunks.

In summary, the keys to unlocking value through implementing sustainability initiatives require positioning through:

  • Identifying marketplace trends that reward innovation toward sustainability
  • Optimizing the linkage between sustainability, environmental and business objectives
  • Creating a systematic process and  internal champions that can drive the system from the inside out
  • Establish a manageable performance measurement system that demonstrates ‘triple bottom line’ results
  • Building assurance systems for compliance and credible and transparent public disclosure.

Are you ready for that ice cream cone?   What’s your appetite?   Single or  double scoop?  Sprinkles on top?

Sustainable Sourcing with a “Green” Supply Chain Brings Competitive Advantages

2 Apr

Well, can the economic tides be turning?  In my former home base of San Diego, they had a saying: “It takes a long time to carefully turn an aircraft carrier around”.  Capgemini Consulting’s new study of 300 leading companies across Europe, US, Asia-pacific and Latin America states that economic recovery has surpassed economic downturn in the list of business drivers for 2010.

Some key findings of note from a supply chain perspective:

  • Over 58 percent of the supply chain managers say their main business driver for 2010 is “Meeting (changing) customer requirements”.  (Well, I guess that is a no-brainer, as a successful business should be nimble and always responsive to customers’ needs to succeed in the marketplace)
  • More than 50 percent of the participating companies indicate they will start up or continue with operational excellence / LEAN.  Another obvious direction – reduces waste, optimize resources.  This should translate into bigger profits and competitive position.
  • Sustainability is the second most important business driver for 2010 — up 16 percent over last year. However, the survey results suggest that this has not yet directly translated into a significant increase in supply chain sustainability projects.  Well, remember that aircraft carrier quote that I just mentioned?

These findings really suggest that while the road to recovery is long, that much foundational work remains.  But the trend from survival to revival is in play now.

Perhaps the biggest take-away from this report is the increasing emphasis of supply chain management in creating the proper ingredients of a successful business strategy. And coincidentally, the concept of a Green Supply Chain is gaining interest among operations practitioners as a sustainable and profitable undertaking. A Green Supply Chain can be thought of as a supply chain that has integrated environmental thinking into core operations from material sourcing through product design, manufacturing, distribution, delivery, and end-of-life recycling.

The implementation of Green Supply Chain initiatives has evolved from strictly a compliance issue into a means of generating value. Traditionally, companies incorporating green projects have focused solely on cost avoidance by assuring compliance, minimizing risk, maintaining health, and protecting the environment. In the emerging value-creation model, implementing green initiatives along a company’s supply chain can raise productivity, enhance customer and supplier relations, support innovation, and enable growth. The Green Supply Chain is no longer exclusively about green issues, but also about generating efficiencies and cost containment. As organizations restructure to reduce their company’s environmental footprint, supply chains have increasingly become a key area of focus. Improvements in transportation efficiency, operations, raw material selection and packaging are all topping the list of “green” supply chain initiatives.

Source: Diamond Management & Technology Consultants

Green Supply Chains enable organizations to:

  • specialize and concentrate manufacturing efforts in a way that manages environmental risks and costs of compliance with existing or new regulations;
  • improve product, process, and supply quality and productivity.
  • make innovative decisions that respond to “green economy” requirements;
  • gain access to key markets through ISO 14001 registration or other certifications;
  • improve or create brand differentiation and customer loyalty by offering unique capabilities to address environmental related requirements and expectations;
  • reduce customer pressure and even gain preferred status; and

The ISO 14001 Certification / Supply Chain Nexus

Over the past several years, studies have been performed worldwide comparing ISO 14001-2004 and its value in development of green supply chains.

  • One recent study found that more than 75% of manufacturing executives surveyed had ISO 14001 certification or were in process in order to enhance their competitive supply chain position,
  • Companies that are already ISO 14001 certified are 40% more likely to assess their suppliers’ environmental performance and 50% more likely to require that their suppliers undertake specific environmental practices,
  • Preference in market share is often given to suppliers that have attained ISO 14001-certification,
  • Consumer preferences are increasingly important drivers for many companies to improve their supply chain environmental activities,
  • Procurement officers increasingly use ISO 14001 certification as a required vendor qualification,
  • Suppliers without an environmental management system will feel increasing pressure to modify their practices or risk losing customers, and will be subject to higher costs for licenses, inspections and insurance.

Questions and issues to consider when developing your Supply Chain/Value Network:

  • Will the service provider enhance the cause of sustainability both upstream (i.e., primary customer/end customer) and downstream (i.e., all tiers of supply base, including logistics service providers)?
  • Will some relationships drive significant redesign of the supply chain, including product innovations and modifications (e.g., collaborative development of decomposable packaging material?
  • Is your supply chain implementing progressive environmental management systems to manage their environmental footprint?
  • Establish a more cohesive collaborative model in transport, warehousing and distribution that will drive efficiencies up and incremental costs down, while reducing environmental impacts throughout the supply chain.

The Green Economy Post assembled a number of Green Supply Chain studies to assist you in your efforts to understand and address these issues in your business (15 Green Supply Chain Studies You Should Know About http://bit.ly/6X3YDU).

Environmentally responsible procurement, in alignment with your company’s environmental sustainability values, is critical for organizations that desire to manage their environmental risk and maintain a competitive advantage.

Not only does this mean that businesses must choose their suppliers well, they also have to ensure that suppliers comply with the standards they claim to meet.

I will have the honor of conducting a breakout session on this topic on April 13th at the Aberdeen Research’s Supply Chain Management (SCM) Summit in San Francisco, CA (http://summits.aberdeen.com/index.php/Supply-Chain-Management-Summit/2010-scm-summit-overview.html).  Hope to see you there!